Question
Suppose a consumer has a demand function for good x of the form x = 2m/5px , where px is the per unit price of
Suppose a consumer has a demand function for good x of the form x = 2m/5px , where px is the per unit price of good x, and m is her income. Originally, her income is 1,000 dollars and the price of good x is 5 dollars. Now suppose that the price of good x falls to 4 dollars.
(a) What is the total change in demand induced by this change in the price?
(b)What is the associated substitution effect?
(c) What is the income effect?
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Public Administration And Law
Authors: David H Rosenbloom, Rosemary O'Leary, Joshua M Chanin
3rd Edition
1439803986, 9781439803981
